The Banking and Strategy Initiative

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Global Moves: Spanish Downgrades, ESM and No Banking Union

Experiences from bank runs during the Great De...

Experiences from bank runs during the Great Depression led to the introduction of deposit insurance in the US. (Photo credit: Wikipedia)

With Merkel shooting down the concept of a Banking union with Joint Deposit insurance and Eurobonds not even making most headlines, the Euro is set for an extended fall as the ECB and the Germans are no where near the new market denominator of required Easing and structural changes. Of course Germany just wants to secure its lent monies and may continue to ask for Cyprus, Spain and any others to cede sovereignity for any cash, Spain continues to bat for a banking union as a ESM sourcing of its bailout funds formally applied,may lead to other sovereign holders to seek definitions of default again which are triggered if conditions for bondholders change so they become secondary to the new ESM bonds.

WASHINGTON, DC - APRIL 24:  (L-R) Arizona stat...

WASHINGTON, DC – APRIL 24: (L-R) Arizona state Sen. Steve Gallardo; Russell Pearce, sponsor of the controversial immigration law Arizona SB 1070, and former Sen. Dennis DeConcini, testify before the Senate Judiciary Committee on Capitol Hill April 24, 2012 in Washington, DC. The committee held a hearing entitled ‘Examining the Constitutionality and Prudence of State and Local Governments Enforcing Immigration Law’ prior to the U.S. Supreme Court hearing arguments on the legislation tomorrow. (Image credit: Getty Images via @daylife)

Spanish banks fell on downgrades yesterday even as bailout funds of EUR 50 -60 B are deemed enough by current audits. New audits happen till September when more clarity emerges on how much is needed when. Estonia and Ireland meanwhile standout as unlikely islands of prosperity having survived austerity measures Greece will not be attending the Summit on Thursday and Friday. Even with a 7% 10-year yield falling to 6.3%, Spain’s rating of Baa3, still investment grade, is ahead of most BRIC ratings including India and Brazil at Ba1 carrying forward application of uneven rating strategies across two decades of geo-political changes which are not being reflected.

Meanwhile the Arizona immigration law was still cleared in some measures but powers to accost immigrants on suspicion were quashed 5-3, and a 6-2 verdict struck down provisions making it a crime to not carry federal registration papers. Yet police can check immigration status when stopping anyone for traffic offenses and others and inform the Federal authorities that the immigrant was an “llegal” Justices Antonio Scalia and Clarence Thomas wrote dissent opinions asking SB1070 be upheld in its entirety

Opinion on the Healthcare law was withheld on Monday

Oil is trading below $80 (WTI) waiting for China and Europe to recover and shore up demand from the US and globally

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